Short-term rental owners routinely miss deductions in the same predictable places, usually because the expense did not feel like a business expense at the time. Here is the working list, along with the three categories where owners most often get the treatment wrong.
My BnB Accelerator, LLC is a real estate acquisition firm, not a CPA firm. This is a plain English explanation of the mechanics so you can have an informed conversation with a qualified professional, not tax advice. Our tax partner is AE Tax Advisors, an independent firm.
The obvious ones
- Mortgage interest on the property
- Property taxes
- Insurance premiums, including any separate flood or wind policy
- Utilities: electricity, gas, water, sewer, trash, internet, and streaming services provided to guests
- Cleaning and turnover costs
- Property management or co-host fees
- Platform commissions and payment processing fees
- Repairs and routine maintenance
- Supplies and consumables: linens, toiletries, paper goods, coffee, and cleaning products
- Lawn care, snow removal, pest control, and pool or hot tub service
- HOA dues
- Depreciation, which for most owners is the largest single line
The ones owners miss
- Travel to the property, including mileage or airfare, lodging, and a portion of meals, when the trip is for a business purpose and is documented contemporaneously.
- Software and subscriptions: dynamic pricing tools, channel managers, messaging automation, smart lock services, noise monitoring, and bookkeeping software.
- Professional fees: CPA, attorney, bookkeeper, and the cost of a cost segregation study itself.
- Education and materials related to operating the existing activity, subject to the usual rules on what qualifies.
- Bank fees and interest on a card or line used for the property.
- Licensing, permits, and registration fees, including annual renewals.
- Marketing: professional photography, a direct booking site, listing optimization services, and advertising.
- Startup and organizational costs, which have their own treatment rules.
Deductions are downstream of structure
Which expenses matter depends on how the activity is classified. We sequence the structure conversation during acquisition so the categories are clean from day one.
Apply NowThe three categories owners get wrong
Repairs versus improvements. A repair keeps the property in ordinary operating condition. An improvement betters, restores, or adapts it, and is generally capitalized and depreciated rather than deducted immediately. Replacing a broken window is not the same as replacing every window. There are regulatory safe harbors that can simplify smaller expenditures, and applying them correctly is a CPA conversation. Keep invoices with descriptions, not just totals. See bookkeeping and records.
Furnishing. Furniture, appliances, and equipment are property with their own recovery periods, not supplies. Itemize furnishing purchases rather than recording a single lump sum, because that schedule feeds the depreciation analysis and any cost segregation work. See cost segregation for Airbnb properties.
Mixed use expenses. A phone, a vehicle, or a laptop used for both the rental and personal purposes requires allocation, and the allocation needs a basis you can explain. Round numbers with no supporting method are exactly what draws scrutiny.
Why the classification upstream matters more than the list
Every deduction on this page is only as valuable as your ability to use it. If the activity is passive, losses suspend and carry forward regardless of how carefully you tracked supplies.
That is why the sequence matters: an average period of customer use of seven days or less removes the activity from rental classification, material participation makes the loss non passive, and then the deductions above determine its size along with depreciation. See the complete STR tax savings guide and our partner firm's material on short-term rental tax strategy.
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Frequently asked questions
What can I deduct on a short-term rental?
The standard categories are mortgage interest, property taxes, insurance, utilities including guest internet and streaming, cleaning, management or co-host fees, platform commissions, repairs, supplies, grounds and pool service, HOA dues, and depreciation, which is usually the largest single line.
What deductions do short-term rental owners miss most often?
Documented business travel to the property, software and subscriptions such as pricing tools and channel managers, professional fees including the cost of a cost segregation study, bank fees and interest on a dedicated card, licensing and permit renewals, and marketing expenses like professional photography.
What is the difference between a repair and an improvement?
A repair keeps the property in ordinary operating condition and is generally deducted currently. An improvement betters, restores, or adapts the property and is generally capitalized and depreciated. Safe harbors exist for smaller expenditures, and applying them correctly requires invoices with descriptions rather than bare totals.
Do deductions help if my short-term rental is passive?
Not currently. If the activity is passive, losses generally suspend and carry forward until you have passive income or dispose of the property, regardless of how carefully expenses were tracked. Classification upstream is what determines whether the deductions are usable this year.